Pemex Oil Output Falls for Ninth Straight Year as Target MissedAdam Williams
Petroleos Mexicanos, the world’s fifth-largest oil producer, fell short of its 2013 crude output target as the company prepares to bring in foreign investors for the first time in 76 years to boost production.
Pemex, as the state-owned company is known, pumped an average of 2.523 million barrels a day in 2013, the ninth consecutive year of declines, according to a preliminary report on the company’s website today. Company executives forecast output to increase to 2.6 million barrels a day by year-end on an Oct. 25 conference call with investors.
Pemex, the third-largest oil exporter to the U.S., expects to reverse output declines as soon as next year after Mexico President Enrique Pena Nieto enacted an energy law on Dec. 20 that will allow foreign companies to produce Mexican oil for the first time since 1938. The energy industry overhaul is forecast to increase Pemex’s annual output to as much as 4 million barrels a day by 2025, according to text of the law.
“Investment in exploration has multiplied dramatically, though production has fallen,” Pemex Chief Executive Officer Emilio Lozoya told Congress Nov. 20. “To increase production in Mexico, more investment is required. One way to do this is to share the investment between other companies and Pemex.”
The company, based in Mexico City, will need an estimated trillion dollars of investment to extract prospective reserves in the next 50 years, Lozoya said in an Oct. 31 interview. To do so, current annual investment must be increased to $62 billion from $25 billion.
Mexico has the biggest proven oil reserves in Latin America after Venezuela and Brazil, with 13.87 billion barrels, and shale-gas resources that may be as much as 460 trillion cubic feet, according to data compiled by Pemex.
Production has fallen by 25 percent since 2004, when Pemex’s monthly output was 3.38 million barrels a day. Output slid this year to to 2.482 barrels a day in July, its lowest level since October 1995.
The new energy law will “allow us to grow much faster, to invest along with co-investors more, and grow our balance sheet and increase profitability,” Lozoya said. “The main driver of our growth will be new investments, and new exploration and production discoveries. The prospects are very bright.”